Evofem Biosciences, Inc.

1. Description of Business and Basis of Presentation

Description of Business

Evofem is a San Diego-based commercial-stage biopharmaceutical company committed to commercializing innovative products to address unmet needs in women’s sexual and reproductive health.

The Company’s first commercial product, PHEXX®, was approved by the FDA on May 22, 2020, for the prevention of pregnancy and launched in the U.S. in September 2020. PHEXX is the first and only non-hormonal prescription contraceptive vaginal gel. Women use it when they have sex, applying PHEXX 0-60 minutes prior to intercourse. Because PHEXX is hormone-free and non-systemic, it is not associated with side effects of hormonal contraceptive methods, which include depression, weight gain, headaches, loss of libido, mood swings and irritability. Taking hormones may not be right for some women, especially those with certain medical conditions including clotting disorders, hormone-sensitive cancers, diabetes, or a BMI over 30, as well as women who are breast feeding, and / or who smoke. Per the National Center for Health Statistics (NCHS), based on data from the 2022-2023 National Survey of Family Growth, approximately 15.9 million women 1 in the U.S. do not want to get pregnant and will not use a hormonal contraceptive.

The Company acquired global rights to SOLOSEC® on July 14, 2024 and relaunched the brand in November 2024. SOLOSEC is an FDA-approved single-dose oral antimicrobial agent that provides a complete course of therapy for the treatment of two common sexual health infections – bacterial vaginosis (BV) and trichomoniasis. This acquisition aligns with and advances the Company’s mission to commercialize innovative and differentiated products for women’s sexual and reproductive health.

Outside the U.S., the Company’s strategy is to commercialize its products in global markets through commercial partnerships and/or license agreements. We licensed commercial rights to PHEXX and SOLOSEC in the Middle East and North Africa (MENA) to Pharma 1 Drug Store, LLC (Pharma 1), an emerging Emirati health care company, in July 2024 and May 2025, respectively. Pharma 1 filed for regulatory approval of PHEXX in the United Arab Emirates (UAE) in June 2025 and of SOLOSEC in the UAE in September 2025. The Emirates Drug Establishment (EDE) issued favorable pricing certificates — a preliminary administrative step toward regulatory approval in the UAE — for PHEXX in November 2025.

In April 2026, the Company entered into a Distributorship Agreement with Clovis Davis Pharmaceuticals, Inc. for distribution of SOLOSEC in sub-Saharan Africa.

Basis of Presentation and Principles of Consolidation

The Company prepared the unaudited interim condensed consolidated financial statements included in this Quarterly Report in accordance with accounting principles generally accepted (GAAP) in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission (SEC) related to quarterly reports on Form 10-Q.

The Company’s financial statements are presented on a consolidated basis, which include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The unaudited interim condensed consolidated financial statements do not include all information and disclosures required by GAAP for annual audited consolidated financial statements and should be read in conjunction with the Company’s consolidated financial statements and notes thereto for the year ended December 31, 2025 included in its Annual Report on Form 10-K as filed with the SEC on March 11, 2026 (the 2025 Audited Financial Statements).

1 Daniels K and Abma J. Current Contraceptive Status Among Females Ages 15–49: United States, 2022–2023. NCHS Data Brief No. 539. August 2025. Data table for Figure 1, sourced from National Survey of Family Growth (NSFG) 2022–2023. https://www.cdc.gov/nchs/data/databriefs/db539.pdf

The unaudited interim condensed consolidated financial statements included in this Quarterly Report have been prepared on the same basis as the Company’s audited consolidated financial statements and include all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations, cash flows, and statements of convertible and redeemable preferred stock and stockholders’ deficit for the periods presented. The results for the three months ended March 31, 2026 are not necessarily indicative of the results expected for the full year. The condensed consolidated balance sheet as of December 31, 2025 was derived from the 2025 Audited Financial Statements.

Reverse Stock Split

On November 26, 2025, the Company’s stockholders approved a reverse stock split of the Company’s issued and outstanding shares of Common Stock at a ratio of between 1-for-500 and 1-for-1,500. The Company’s board of directors has not effectuated the reverse stock split as of the date of filing of this Quarterly Report.

Risks, Uncertainties and Going Concern

Any disruptions in the commercialization of PHEXX or SOLOSEC and/or their supply chains could have a material adverse effect on the Company’s business, results of operations and financial condition.

The condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities, in the normal course of business, and does not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classification of liabilities that may result from the outcome of this uncertainty.

The Company’s principal operations are related to the commercialization of PHEXX and, since July 2024, SOLOSEC. Additional activities have included raising capital, identifying alternative manufacturing to lower PHEXX cost of goods sold (COGS), re-establishing the manufacturing / supply chain for SOLOSEC, seeking ex-U.S. licensing partners to add non-dilutive capital to the balance sheet and geographically diversify its revenue streams, seeking product in-licensing/acquisition opportunities to expand and diversify its U.S. revenue streams, and establishing and maintaining a corporate infrastructure to support commercial products. The Company has incurred operating losses and negative cash flows from operating activities since inception, excluding non-recurring accounts payable and accrued expenses settlements, debt extinguishments, and changes in accounting estimates in certain prior periods. As of March 31, 2026, the Company had a working capital deficit of $72.7 million and an accumulated deficit of $902.9 million.

On January 6, 2025, the Company received a written notice from the OTC Markets notifying the Company that, because the closing bid price for the Company’s Common Stock was below $0.01 per share for 30 consecutive calendar days, the Company was not compliant with the minimum bid price requirement for continued listing on the OTCQB, as set forth in the OTCQB listing standards, section 2.3 (the Minimum Bid Price Requirement). In accordance with OTCQB Listing Standards, Section 4.1, to regain compliance with the Minimum Bid Price Requirement the Company’s closing bid price was required to be equal to or greater than $0.01 for ten consecutive trading days during the 90-day compliance period which ended April 6, 2025. On April 22, 2025, the Company received a written notice from the OTC Markets that it did not regain compliance with the Minimum Bid Price Requirement during the specified period, and as such, its Common Stock was removed from OTCQB and began trading on the OTC Pink Current (OTCPK) at market open on April 23, 2025.

The Company’s Common Stock was moved to and began trading on the Over-the-Counter Integrated Disclosure (OTCID), the new basic reporting market tier launched by the OTC Markets Group, at market open on July 1, 2025.

Management’s plans to meet its cash flow needs in the next 12 months include generating recurring product revenue from PHEXX and SOLOSEC, earning milestone payments by achieving certain regulatory milestones under the License and Supply Agreement with Pharma 1 for SOLOSEC, generating product revenue from the sale of PHEXX and SOLOSEC to Pharma 1 and SOLOSEC to Clovis Davis for approved countries in the respective licensed Territories, restructuring its current payables, and obtaining additional funding through non-dilutive or dilutive financings, collaborations or partnerships with other companies, including license agreements for PHEXX and/or SOLOSEC in the U.S. or foreign markets, or through other potential business combinations.

The Company anticipates it will continue to incur net losses for the foreseeable future. According to management estimates, liquidity resources were not sufficient to maintain the Company’s cash flow needs for the twelve months from the date of issuance of these interim condensed consolidated financial statements.

If the Company is not able to obtain the required funding through a significant increase in revenue, license agreements for PHEXX and/or SOLOSEC, equity or debt financings, or other means, or is unable to obtain funding on terms favorable to the Company, or if there is another event of default affecting the notes payable, there will be a material adverse effect on commercialization operations and the Company’s ability to execute its strategic development plan for future growth. If the Company cannot successfully raise additional capital and implement its strategic development plan, the Company may be forced to make further reductions in spending, including spending in connection with its commercialization activities, extend payment terms with suppliers, liquidate assets where possible at a potentially lower amount than as recorded in the condensed consolidated financial statements, suspend or curtail planned operations, or cease operations entirely. Any of these could materially and adversely affect the Company’s liquidity, financial condition and business prospects, and the Company would not be able to continue as a going concern. The Company has concluded that these circumstances and the uncertainties associated with the Company’s ability to obtain additional equity or debt financing on terms that are favorable to the Company, or at all, and otherwise succeed in its future operations raise substantial doubt about the Company’s ability to continue as a going concern.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the interim condensed consolidated financial statements and the notes thereto.

Significant estimates affecting amounts reported or disclosed in the interim condensed consolidated financial statements include, but are not limited to: the assumptions used in measuring the revenue gross-to-net variable consideration items; the allowance for expected credit losses estimate; the assumptions used in estimating the notes carried at fair value, preferred stock, and purchase rights issued; and the assumptions used in the valuation of inventory, the intangible asset, and contingent liabilities; the useful lives and recoverability of long-lived assets; and the valuation of deferred tax assets. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances and adjusts when facts and circumstances dictate. These estimates are the basis for making judgments about the carrying values of assets, liabilities and recorded expenses that are not readily apparent from other sources. As future events and their effects cannot be determined with precision, actual results may materially differ from those estimates or assumptions.

*Segment Reporting *

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker (CODM), the Chief Executive Officer of the Company, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business inone operating segment. The Company’s CODM assesses performance and decides how to allocate resources for the Company’sone operating segment based on consolidated net income or loss that is reported on the interim condensed consolidated statements of operations. The Company has also evaluated the significant segment expenses incurred by the single segment that are regularly provided to the CODM. The significant segment expenses regularly provided to the CODM are consistent with those reported on the interim condensed consolidated statements of operations and include cost of goods sold, research and development, net, selling and marketing, and general and administrative. The CODM uses these expense categories, along with data on product sales, net, to make key operating decisions such as: the strategic direction of the Company, pursuing and/or approving product acquisitions, decisions about key personnel, and approving annual operating budgets. The Company manages assets on a consolidated basis as reported on the interim condensed consolidated balance sheets.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and restricted cash and cash equivalents. Deposits in the Company’s checking, time deposit and investment accounts are maintained in federally insured financial institutions and are subject to federally insured limits or limits set by Securities Investor Protection Corporation. The Company invests in funds through a major U.S. bank and is exposed to credit risk in the event of default to the extent of amounts recorded on the condensed consolidated balance sheets.

The Company has not experienced any losses in such accounts and believes it is not exposed to significant concentrations of credit risk on its cash, cash equivalents and restricted cash balances on amounts in excess of federally insured limits due to the financial position of the depository institutions in which these deposits are held.

The Company is also subject to credit risk related to its trade accounts receivable from product sales. Its customers are located in the U.S. and, starting in the fourth quarter of 2025, in the United Arab Emirates (UAE), and consist of wholesale distributors, retail pharmacies, mail-order specialty pharmacies and, in the UAE, its licensee, Pharma 1.

In the U.S., products are distributed primarily through three major distributors and mail-order pharmacies, which receive service fees calculated as a percentage of the gross sales and a fee-per-unit shipped or sold, respectively. These entities are not obligated to purchase any set number of units; they distribute products on demand as orders are received.

For the three months ended March 31, 2026 and 2025, the Company’s three largest customers combined made up approximately 63% and 75% of its gross product sales, respectively. As of March 31, 2026 and December 31, 2025, the Company’s three largest customers combined made up 69% and 91%, respectively, of its trade accounts receivable balance.

Significant Accounting Policies

There have been no changes to the significant accounting policies that were described in Note 2 – Summary of Significant Accounting Policies of the 2025 Audited Financial Statements in the Company’s Annual Report.

Cash and Cash Equivalents and Restricted Cash and Cash Equivalents

Cash and cash equivalents and restricted cash and cash equivalents consist of readily available cash in checking accounts and money market funds. Restricted cash and cash equivalents consists of cash held in monthly time deposit accounts as well as an immaterial letter of credit.

Net Income (Loss) Per Share

Basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. The net income (loss) available to common stockholders is adjusted for amounts in accumulated deficit related to the deemed dividends triggered for certain financial instruments. Such adjustment was immaterial in each of the three months ended March 31, 2026 and 2025. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, potentially dilutive securities are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore, basic and diluted net loss per share were the same for the three months ended March 31, 2026. Potentially dilutive securities excluded from the calculation of diluted net loss per share are summarized in the table below. Common shares were calculated for the convertible preferred stock and the convertible debt using the if-converted method.

The schedule of potentially dilutive securities excluded from the calculation of diluted net income (loss) per share is included below:

The following table sets forth the computation of net income attributable to common stockholders, weighted average common shares outstanding for diluted net income per share, and diluted net income per share attributable to common stockholders for the three months ended March 31, 2025 (in thousands, except share and per share amounts).

*Correction of Previously Issued Interim Condensed Consolidated Financial Statements and Prior Period Errors *

In the fourth quarter of 2025, the Company identified issues with the disclosure of the weighted-average shares outstanding and the basic and diluted earnings per share calculations. First, the prefunded warrants should have been included in the weighted-average shares outstanding in the disclosure of basic and diluted earnings per share for the three months ended March 31, 2025. While correcting this calculation resulted in an increase in the weighted-average shares outstanding of 4,807,692, there was no change to net income per share attributable to common shareholders for the three months then ended. Secondly, the Company discovered in the calculation of the diluted net income per share attributable to common stockholders that (1) the adjustment related to the noncash interest expense on convertible debt, net of tax, was incorrectly calculated at the statutory tax rate instead of the Company’s effective tax rate and (2) the pro forma adjustment to reflect assumed conversion of convertible debt was calculated incorrectly. As a result of these corrections, for the three months ended March 31, 2025, net income attributable to common stockholders increased by $0.2 million and the weighted average shares used to compute net income attributable to common stockholders increased by 115,137,250 (inclusive of the change to the weighted-average shares outstanding as described above). There was no impact to net income per share attributable to common stockholders, diluted. The Company has concluded that the impact to the previously issued interim condensed consolidated financial statements is not material.

*Recently Adopted Accounting Pronouncements *

In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-04,Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, designed to clarify the requirements for accounting for the settlement of a debt as an induced conversion versus as an extinguishment. This guidance was effective for the Company on January 1, 2026 and the Company will apply the guidance on any future induced debt conversions.

In July 2025, the FASB issued ASU 2025-05,Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, to provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Accounting Standards Codification (ASC) 606 whereby companies are allowed to assume that current economic conditions will not change over the remaining life of current accounts receivable. The Company adopted ASU 2024-05 on January 1, 2026, but because the Company does not currently expect any credit losses for accounts receivable and does not have any contract assets, there was no impact to the Company’s unaudited condensed consolidated financial statements.

No other significant new standards have been adopted during the three months ended March 31, 2026.

Recently Issued Accounting Pronouncements — Not Yet Adopted

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standards setting bodies that are adopted as of the specified effective date.

In October 2023, the FASB issued ASU 2023-06,Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, designed to clarify or improve disclosure and presentation requirements on a variety of topics and align the requirements in the FASB ASC with the SEC regulations. This guidance is effective for the Company no later than June 30, 2027. The Company is still evaluating the impact of ASU 2023-06.

In November 2024, the FASB issued ASU 2024-03,Disaggregation of Income Statement Expenses, which primarily requires disaggregation of specific expense categories in disclosures within the footnotes on an annual and interim basis. ASU 2024-03 is effective for the Company’s annual period ending December 31, 2027 and interim periods thereafter. Early adoption is permitted. In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The Company is still evaluating the impacts of ASU 2024-03 and ASU 2025-01.

In December 2025, the FASB issued ASU 2025-11,Interim Reporting (Topic 270): Narrow-Scope Improvements, to improve the guidance in ASC 270 related to interim reporting and also to clarify when it applies. This guidance is effective for the Company no later than January 1, 2028. The Company is still evaluating the impact of ASU 2025-11.

In December 2025, the FASB issued ASU 2025-12,Codification Improvements, to update the FASB ASC for a broad range of topics arising from technical corrections, unintended application of the ASC, clarifications, and other minor improvements. This guidance is effective for the Company no later than January 1, 2027. The Company is still evaluating the impact of ASU 2025-12.

In April 2026, the FASB issued ASU 2026-01,Equity (Topic 505): Initial Measurement of Paid-in-Kind Dividends on Equity-Classified Preferred Stock, to add guidance on how Companies should measure paid-in-kind dividends on equity-classified preferred stock. The guidance is effective for the Company no later than January 1, 2027. The Company is still evaluating the impact of ASU 2026-01.

The Company does not believe the impact of any other recently issued standards and any issued but not yet effective standards will have a material impact on its unaudited condensed consolidated financial statements upon adoption.

3. Revenue

In accordance with ASC 606, the Company recognizes revenue when its performance obligation is satisfied by transferring control of the product to a customer. Any payments received before the Company satisfies its performance obligations are considered deferred revenue until the obligations are satisfied. In accordance with the Company’s contracts with customers, control of the product is transferred upon the conveyance of title, which occurs when the product is sold to and received by a customer.

The Company’s customers are primarily located in the U.S. and consist of wholesale distributors, retail pharmacies, and mail-order specialty pharmacies. The first order for PHEXX from the UAE was placed in late 2025 and will be manufactured for and sold to Pharma 1 following Emirates Drug Establishment approval of the product. For all customers, payment terms typically range from 31 to 66 days, include prompt pay discounts, and vary by customer. Trade accounts receivable due to the Company from contracts with its U.S. based customers are stated separately in the condensed consolidated balance sheets, net of various allowances as described in the Trade Accounts Receivable policy in Note 2 – Summary of Significant Accounting Policies to the 2025 Audited Financial Statements. Trade accounts receivable due to the Company from Pharma 1 are included in Prepaid and other current assets in the condensed consolidated balance sheets.

The amount of revenue recognized by the Company is equal to the amount of consideration that is expected to be received from the sale of product to its customers. Revenue is only recognized when the performance obligation is satisfied. To determine whether a significant reversal will occur in future periods, the Company assesses both the likelihood and magnitude of any such potential reversal of revenue.

The Company’s products are sold to domestic customers at the Wholesale Acquisition Cost (WAC), or in some cases at a discount to WAC. However, the Company records product revenue net of reserves for applicable variable consideration. These types of variable consideration reduce revenue and include the following:

In accordance with ASC 606, the Company must make significant judgments to determine the estimate for certain variable consideration. For example, the Company must estimate the percentage of end-users that will obtain the product through public insurance such as Medicaid or through private commercial insurance. To determine these estimates, the Company relies on historical sales data showing the amount of various end-user consumer types, inventory reports from the wholesale distributors and mail-order specialty pharmacy, and other relevant data reports.

The specific considerations that the Company uses in estimating these amounts related to variable consideration are as follows:

Distribution services fees – The Company pays distribution service fees to its wholesale distributors and mail-order specialty pharmacies. These fees are a contractually fixed percentage of WAC and are calculated at the time of sale based on the purchase amount or distributor’s sales of products for certain wholesale distributors. The Company considers these fees to be separate from the customer’s purchase of the product and, therefore, they are recorded in other current liabilities on the condensed consolidated balance sheets.

Prompt pay and other discounts – The Company incentivizes its customers to pay their invoices on time through prompt pay discounts. These discounts are an industry standard practice, and the Company offers a prompt pay discount to each wholesale distributor and retail pharmacy customers. The specific prompt pay terms vary by customer and are contractually fixed. Prompt pay discounts are typically taken by the Company’s customers. The Company may also give other discounts to its customers to incentivize purchases and promote customer loyalty. The terms of such discounts may vary by customer. An estimate of the prompt pay discounts and other discounts are recorded at the time of sale based on the purchase amount as contra trade accounts receivable on the condensed consolidated balance sheets.

Product returns – Domestic customers have the right to return product that is within six months or less of the labeled expiration date or that is past the expiration date by no more than twelve months. PHEXX has a shelf life of 48 months. SOLOSEC has a shelf life of 60 months. The Company uses historical sales and return data to estimate future product returns. Product return estimates are recorded as other current liabilities on the condensed consolidated balance sheets.

Chargebacks – Certain government entities and covered entities (e.g., Veterans Administration, 340B covered entities, group purchasing organizations) are able to purchase products at a price discounted below WAC. The difference between the government or covered entity purchase price and the wholesale distributor purchase price of WAC will be charged back to the Company. The Company estimates the amount of each chargeback channel based on the expected number of claims in each channel and related chargeback that is associated with the revenue being recognized for product that remains in the distribution channel at the end of each reporting period. Estimated chargebacks are recorded as contra trade accounts receivable on the condensed consolidated balance sheets.

Rebates – The Company is subject to mandatory discount obligations under the Medicaid and Tricare programs. The rebate amounts for these programs are determined by statutory requirements or contractual arrangements. Rebates are owed after the product has been dispensed to an end user and the Company has been invoiced. Rebates for Medicaid and Tricare are invoiced in arrears. The Company has numerous commercial rebate programs for its products whereby certain customers receive a rebate as contractually arranged; the program for PHEXX ended on December 31, 2025. The Company estimates the amount of rebates based on the expected number of claims and related cost that is associated with the revenue being recognized for product that remains in the distribution channel at the end of each reporting period. Rebate estimates are recorded as other current liabilities on the condensed consolidated balance sheets.

Patient support programs – The Company voluntarily offers a co-pay program to provide financial assistance to patients meeting certain eligibility requirements. The Company estimates the amount of financial assistance for these programs based on the expected number of claims and related cost associated with the revenue being recognized for product that remains in the distribution channel at the end of each reporting period. Patient support program estimates are recorded as other current liabilities on the condensed consolidated balance sheets.

The variable consideration discussed above was recorded in the condensed consolidated balance sheets and consisted of $0.1 million and $0.5 million in contra trade accounts receivable as of March 31, 2026 and December 31, 2025, respectively and $9.8 million and $11.2 million in other current liabilities as of March 31, 2026 and December 31, 2025, respectively.